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Mandalay Resources keeps on trucking; expects to lift output in 2017

In the three months to March 31 this year, Mandalay produced 32,481 ounces of gold equivalent from the three mines
Mandalay Resources keeps on trucking; expects to lift output in 2017
The Bjorkdal site is in Sweden

There was recently a raft of executive changes announced by Canada - listed gold, silver and antimony producer Mandalay Resources Corp (TSE:MND) but the firm's goal is arguably timeless.

Chief executive Mark Sander said it was all aimed at boosting "new acquisition opportunities" and produce results from a "growing" number of operations.

Recent first quarter sales and production numbers from the miner with projects in Australia, Chile and Sweden showed the journey is progressing.

In the three months to March 31 this year, Mandalay produced 32,481 ounces of gold equivalent from the three mines  - Cerro Bayo, Bjorkdal and Costerfield - down from 39,965 ounces in the same three months in 2016.

Sales of gold equivalent ounces came in at 34,801 ounces in the latest quarter, down from 40,808 ounces in the first quarter of 2016.

On track to reach output guidance...

But Mandalay confirmed it was on track to reach its production guidance of between 138,000 and 163,000 ounces of gold equivalent for 2017.

So what comes next? Mandalay shares are well off the highs seen in the middle of last year and it has admitted the fiscal year was a "challenging" one.

It generated 5% lower revenue in 2016 than in 2015 due to expected grade-related lower production at Costerfield, offset by expected higher production at the Bjorkdal mine.

For 2016 as a whole, Mandalay generated revenue of $185.5 mln (2015: $194mln) and a loss before tax of $15.1mln (2015: $22.4mln profit).

Higher metals prices help....

Production for 2016 overall was 145,500 compared to 166,700 ounces a year earlier. What bolstered the group was higher metals prices, which were seen last year.

Total output was made up of 103,245 saleable ounces of gold, the second highest ever produced by the company, 3,598 tonnes of antimony and 1,731,031 ounces of silver.

The fact it wants to boost acquisition opportunities suggests  the miner wants to grow the portfolio with new mines, to enhance output.

And it has already had success recently in growing potential resources it already has, via exploration.

In January this year Sander said:  "In the second half of 2016, exploration yielded generally favourable results. Our drilling generated significant new drill intersections that are expected to support short-term and eventual long-term mineral resource and reserve additions for the company as a whole."

Potential to expand production..

Notably, at Bjorkdal, Mandalay has now received the mining licence to extend its mining concession to include the Lake zone and the eastern extension of Central Zone.

Near-mine surface drilling has focused on extending shallow gold resources adjacent to the Bjorkdal East pit as well as in and around the newly defined Nylunds mineral reserve extending approximately 750m southeast of the current pit limits. The Nylunds deposit remains open to the east, southeast and to depth.

In the first quarter at Bjorkdal, production of higher-grade underground ore at the mine was limited due to a bottleneck  of underground haulage.

"Additional underground loading and haulage capacity was added at the end of March, which is expected to directly increase the stope production and in turn increase the rate of delivery of high-grade underground ore for the remainder of the year," said Mandalay.

At Costerfield in Australia, in coming quarters, output is seen by management to increase as the miner extracts higher-grade stopes in the Cuffley and N lodes later in the year.

At Cerro Bayo in Chile production  continues to grow in 2017 as a greater number of development headings and production stopes become available from the Coyita mine.

"As well, we have optimized plant shift schedules to reduce costs and match the planned ore production of the mine," said Sander.

In exploration, infill drilling at Cerro Bayo has continued in and around the Laguna Verde area, with target testing drilling in Laguna Verde, the Brillantes sector and the Cerro Bayo sector.

In terms of reserves, Mandalay has 1,024,000 ounces of gold equivalent in proven and probable reserves and 2,229,000 ounces of gold equivalent in measured and indicated resources inclusive of reserves.

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Mandalay Resources Corp. Timeline

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